Types of Assets That Go Through Probate in New York
Probate is a legal process that occurs after someone passes away, during which their assets are distributed, and their debts are settled. However, not all assets go through probate. Understanding which assets are subject to probate in New York can help you plan your estate more effectively and minimize the complexities your heirs may face. In this article, we’ll explore the types of assets that commonly go through probate and offer insights into estate planning strategies to reduce probate.
Assets That Typically Go Through Probate
1. Individual Ownership: Assets owned solely by the deceased individual without designated beneficiaries or joint owners often go through probate. These assets include real estate, bank accounts, vehicles, and personal property.
2. Assets Without Beneficiary Designations: Assets like retirement accounts (e.g., IRAs and 401(k)s) and life insurance policies that lack designated beneficiaries may go through probate. It’s essential to ensure you’ve named beneficiaries to avoid probate for these assets.
3. Assets Held as Tenants in Common: If the deceased person co-owned property as tenants in common, their share of the property typically goes through probate. Each tenant’s share is considered part of their estate and subject to distribution.
4. Assets Without Transfer-on-Death (TOD) or Payable-on-Death (POD) Designations: Bank accounts, investments, and securities registered without TOD or POD beneficiaries may require probate. Adding these designations can help bypass probate for these assets.
Assets That Avoid Probate
1. Jointly Owned Assets: Assets held in joint tenancy or tenancy by the entirety with rights of survivorship automatically pass to the surviving co-owner(s) outside of probate. Common examples include jointly owned real estate and bank accounts.
2. Assets with Beneficiary Designations: Assets like life insurance policies, retirement accounts, and some bank accounts can bypass probate when they have designated beneficiaries. The named beneficiaries receive these assets directly.
3. Trust Assets: Assets held in a revocable living trust or an irrevocable trust are typically not subject to probate. The trust document governs the distribution of these assets, avoiding the probate process.
4. Transfer-on-Death (TOD) and Payable-on-Death (POD) Accounts: Bank accounts and securities with TOD or POD designations pass directly to the named beneficiaries upon the account holder’s passing, bypassing probate.
Estate Planning to Minimize Probate
If you want to reduce the assets that go through probate and streamline the distribution of your estate, consider these estate planning strategies:
1. Create a Revocable Living Trust:
A revocable living trust allows you to transfer assets into the trust’s ownership while retaining control during your lifetime. Upon your passing, the assets held in the trust can be distributed to beneficiaries without probate.
2. Designate Beneficiaries:
Ensure that all your accounts and assets, including retirement accounts and life insurance policies, have designated beneficiaries. Review and update these designations as needed.
3. Joint Ownership:
Consider joint ownership for assets you wish to pass directly to a co-owner upon your passing. Be aware of the implications and potential tax consequences of joint ownership.
4. Use TOD and POD Designations:
Take advantage of TOD and POD designations for bank accounts and securities to simplify the transfer of these assets to beneficiaries.
Remember that estate planning is highly personalized, and the best approach for you may vary depending on your circumstances and goals. Consulting with an experienced estate planning attorney, such as Morgan Legal Group, can help you create a plan that aligns with your objectives and minimizes probate for your heirs.
